Infinite Mint Attack

An infinite mint attack is a situation where an attacker exploits a smart contract flaw or a cryptocurrency’s code to create an unlimited amount of tokens within a protocol.

What Is an Infinite Mint Attack?

An infinite mint attack is a type of exploit involving a malicious actor or hacker manipulating smart contract vulnerabilities to generate tokens in large quantities. The actor typically creates token amounts that exceed the token’s intended supply limit. This attack devalues or debases the token’s value and may potentially damage its economy and disrupt the entire ecosystem.

This type of attack occurs due to security lapses in a blockchain protocol, which enables attackers to find loopholes, bugs, or other code vulnerabilities to exploit. The perpetrators often quickly dump all the freshly minted tokens on the market, causing the token’s price to rapidly decline in value.

For example, in March 2021, an attacker accessed the PAID Network’s private keys and used them to modify smart contract code. The modified code allowed the attacker to mint more than 59M $PAID tokens nearly leading to a loss of $180M. The hacker converted 2.5M of these tokens into ETH (worth over $3M at the time) before the attack could be stopped. The inflated supply dropped the token’s price by 85% due to the inflated supply.

How Can It Be Prevented?

This attack underscores the significance of thoroughly auditing smart contracts and protocol code to prevent such exploits. In addition, introducing a proof-of-work (PoW) algorithm in a protocol is a common approach to discourage such dishonest acts. PoW would typically require the attacker to expend vast amounts of computing power to solve complex mathematical puzzles to create new coins. This makes it difficult and expensive to carry out such an attack. Alternatively, implementing a proof-of-stake (PoS) consensus mechanism and establishing a hard cap on the total token supply can also effectively mitigate the risk of an infinite mint attack.